Is equity release safe? – Rest Less

Even though taking out an equity release plan is safe, it’s important to remember that there are downsides that must be considered before deciding whether it’s the right option for you.

For example, if you take out an equity release scheme you will reduce the amount of inheritance you’ll be able to leave your loved ones. The costs can rack up over the years, as you will pay interest on the money you release, and the amount you owe can roll up into a significant sum by the time it’s repaid on your death, or when you move into long-term care. For example, interest rolling up at 3% would see the amount you owe double after 24 years. You can see what the total cost of borrowing could be by using our Lifetime mortgage calculator.

Some of the other potential downsides include limiting your options to move home or downsize in the future. You may face charges if you do, or restrictions on the type of property you can move to, for example, although some plans are portable. Any means-tested benefits you receive could also be affected by you releasing equity from your property. Find out more about other risks involved in equity release in our article Equity release – what are the risks?

Before you consider releasing equity, you’ll need to check that you meet the eligibility requirements. You will need to be aged over 55 to take out an equity release plan. Read more in our article Am I eligible for equity release?

You should also think about what you need the money for, and if there are alternative options that might be more suitable. There are some useful questions you can ask yourself to help decide if it’s the right option in our article Equity release: 8 questions to ask yourself if you’re considering equity release.

Author: wpadmin

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